Blockchain in Supply Chain: Welcome to the Transparent Future

15 September 2023

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Blockchain in supply chaing explained in image

First things first. Let’s define what a supply chain is. A supply chain is the interconnected network of people, companies, resources, technology, and activities that play a part in making and selling a product. And overlooking the whole process is termed as supply chain management. Concept understood? Fantastic! Let's proceed. Now, let's delve into the other aspect of our topic today: blockchain.

Even though blockchain technology became popular in 2008 (all hail Bitcoin), the concept of a cryptographically secured chain of blocks existed long before. Research scientists Stuart Haber and W. Scott Stornetta wanted to implement a real-time solution for timestamping digital documents to prevent backdating as well as tampering. Thanks to Satoshi Nakamoto, blockchain technology has found the fame it deserves and is evolving steadfastly like wildfire!

Supply Chain Management: The Significance

Imagine placing an order on Amazon. All you see on the surface is that you selected a product of your choice, added it to the cart, placed the order, and finally, when the day comes, you receive your precious order and go ahead with unpacking it. Simple, right? No! Countless activities take place once you set the wheels in motion by just clicking the ‘place order’ button. Let’s check out the importance of supply chain management.

  • It enables businesses to predict stock shortages using readily available data, such as available products, reorder frequency, and invoices. This, in turn, helps prevent potential sales losses.
  • When done efficiently, supply chain management can help eliminate unnecessary distribution channels like costly warehouses, enabling swift delivery from manufacturer to retailer and thereby cutting overall costs.
  • With time, supply chain management slashes production expenses by guaranteeing timely deliveries of raw materials to assembly factories, helping businesses prevent material shortages or production delays.
  • Supply chain management ensures customers receive the correct products in the right places and at the right times, ultimately enhancing customer service.
  • It also helps maintain the quality of the stock. How so? Since suppliers and retailers are working with the same standards in mind, any degradation in quality can be detected early on and rectified.

The benefits of supply chain management are far too many to count. With that said, let's take a look at how supply chain management benefits from collaborating with blockchain technology.

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Blockchain Technology: What’s All the Buzz About?

In recent years, the term 'blockchain technology' has become quite a buzzword, often associated with cryptocurrencies such as Bitcoin. You might be wondering, "What exactly is blockchain technology?" Allow us to explain. Blockchain is a public, immutable ledger designed to seamlessly record transactions and track assets within a business network. This decentralized technology records transactions across multiple computers, ensuring that any alterations to a block require the modification of all subsequent blocks. In layman’s terms, blockchain enables the tracking and exchange of virtually any valuable asset without any intermediary (thanks to smart contracts), minimizing risk and decreasing costs for all participants. Capiche? Great! It's time to delve deep into the most crucial aspect of our article.

Blockchain in Supply Chain Management: The Much- Awaited Collaboration

Blockchain technology holds the potential to transform supply chain management by significantly amplifying transparency and reinforcing security. In the sections that follow, we will look into the key applications of this blockchain within the supply chain.

  1. Blockchain can help confirm a product’s authenticity and avoid counterfeit stocks by facilitating the recording of secure and immutable data detailing a product's origin and its journey within the supply chain.
  2. Blockchain technology offers real-time monitoring and traceability of goods and products across the supply chain. This fosters transparency and trust among various stakeholders within the supply chain.
  3. Blockchain can serve as a tool to streamline supply chain finance by offering secure and transparent transaction records between various manufacturers and suppliers.
  4. By harnessing blockchain technology, smart contracts can be applied to automate and optimize supply chain operations, resulting in cost reductions and enhanced efficiency. Smart contracts are self-executing programs that run when a pre-defined condition is met. How cool is that?
  5. Through the digitization and automation of supply chain processes using blockchain technology, it becomes possible to significantly reduce administrative costs and eliminate paperwork. This helps save time as well as resources.

Closing Thoughts

Evolution is ingrained in our human nature, and it has led to the emergence of a next-generation technology known today as 'blockchain.' The merging of blockchain and supply chain management is nothing but a 'match made in heaven.' Nevertheless, the widespread adoption of blockchain in the supply chain has yet to become mainstream, primarily due to the need for advanced expertise to fully harness its advantages. One thing is for sure: Blockchain technology is undoubtedly here to stay, just as supply chain management is a fundamental part of modern commerce. All that remains is to wait for the day when conventional supply chain management transforms into an all-encompassing logistics solution fueled by blockchain.

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